Banksia legal action details revealed

BANKSIA investors will be contacted within the next 30 days to give them more information about a class action legal case on their behalf against the Banksia directors and auditors.

The solicitor organising the class action, Mark Elliott, said a letter to be sent to investors in Banksia Securities (BSL) and the associated Cherry Fund (CFL) would explain the class action, provide a summary of the proceedings and give details of the legal people organising the class action.

It would also refer investors to the group’s website, Banksiaclassaction.com.au, which was presently being built.

In other developments regarding the class action, one of the parties being sued, Sydney-based The Trust Company, last week declared the allegations against it had no basis.

In a statement to the Australian Stock Exchange, The Trust Company said it had acted as trustee for the debentures issued by Banksia Securities.

The Trust Company said it would keep the market updated about the claim in accordance with its continuous disclosure obligations.

The class action, which was lodged with the Supreme Court of Victoria, alleges The Trust Company failed to adequately supervise the financial position and viability of BSL and CFL to protect the interest of the holders of debentures and/or unsecured deposit notes issued by BSL and CFL.

Other parties named as defendants in the class action are the directors of BSL and CFL who are alleged not to have adequately managed the two companies, and the auditors who are alleged to have failed to adequately audit BSL and CSL’s books or report any breaches of law to the Australian Securities and Investments Commission (ASIC).

In other developments, the receivers for BSL and CSL, McGrathNicol, said it would not be involved in any class action against the two companies.

McGrathNicol also said it would continue to keep investors updated about the result of its investigations into the two companies.

A spokeswoman for the receivers said they would not hold a creditors’ meeting because the two companies had been placed in receivership rather than voluntary administration.

“Creditors’ meetings are part of a voluntary administration,” the spokeswoman said.

The receivers would keep investors updated through the hotline for investors or through further information sessions.

The receivers held a series of information sessions throughout Victoria on December 14 at which they told BSL and CFL investors they were likely to lose up to half of their investments.

Under such an outcome, the 16,000 investors in the two companies stand to lose more than $300 million.

ehimmelreich@fairfaxmedia.com.au

In a statement to the Australian Stock Exchange, The Trust Company said it had acted as trustee for the debentures issued by Banksia Securities.